Long Reads

Has the “Great Decoupling” Gone Viral?

Nowadays, it is common to hear arguments warning of a bifurcation of the global economy into mutually exclusive American and Chinese spheres of influence. But, 18 months after the first shots in the Sino-American trade war were fired, the situation is more complicated than that, owing not just to economic realities and the new coronavirus outbreak, but also each country's political priorities.

NEW YORK – The increasingly nonchalant deployment of the term “decoupling” to describe the long-term trajectory of US-China relations demonstrates anew that in diplomacy, words can be bullets. Of course, for some, “decoupling” simply reflects today’s unfolding reality, whereas for others, it is the desired outcome.

This second camp may be emboldened by the coronavirus outbreak that began in Wuhan. The epidemic has already taken more lives on the Chinese mainland than did the 2002-03 SARS outbreak, and it is also spreading more rapidly. It has reached at least two dozen countries, including the United States, and rattled Asian financial markets. As other countries rush to shield themselves from China, and as the Chinese economy slows as a result of the lockdown in many cities, fears of a global downturn loom large.

Foreigners who clinically calculate the impact of the virus on themselves should spare a thought for the humanitarian impact on millions of Chinese families living in fear and isolation, their small-business livelihoods often stretched to the breaking point, hoping and waiting for the outbreak to peak.

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Coronavirus affect is much smaller than the flu in deaths but much more in hysterics. Also the USA is now a banana republic or monarchy whatever as this last two weeks have proven. And still condemning others. Idiots still want the US dollar though. Amazing the ability of social media to spawn hysteria and mania. And inertia This last week an American official had to deny that America is a banana republic haha when you have to deny it you are it

Given the circumstances, this decoupling might have proven prescient and good for the world economy. Too much globalization can be as bad as dismantling the fuses that protect complex circuitry from voltage surges. This decoupling as paradoxical as it seems might have come in the nick of time to stave off a major disaster in the stock markets given their spillover effects into the real economies. It all started with negative news of the spread of a Coronavirus, which luckily is being dealt with. Had it not been for the fact that Trump interrupted business as usual, the spread of the coronavirus would have taken a bigger toll in Western economies. The Dow and US stock indices seem to have shrugged off initial concerns, while Asian markets did tank, proving that the disentanglement is working and necessary to help the world economy avoid a massive systemic failure as counterintuitive as it seems.

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